Stop-Loss Reinsurance (SLR)

Definition - What does Stop-Loss Reinsurance (SLR) mean?

Stop-loss reinsurance is a type of excess of loss reinsurance wherein the reinsurer is liable for the insured's losses incurred over a certain period (usually a year) that exceed a specified amount or percentage of some business measure, such as earned premiums written, up to the policy limit.

Stop-loss reinsurance may also be known as excess of loss ratio reinsurance.

Insuranceopedia explains Stop-Loss Reinsurance (SLR)

Insurance companies take on the risk of having claims filed and incurring losses every time they underwrite a policy. Therefore, to reduce the overall risk they take on, they work with reinsurers. In this case, stop-loss reinsurance, which does not function on individual claim basis, helps protect the insurer from suffering losses that exceed a certain limit over the course of a year. For instance, if an insurance company's total losses exceed 75 percent of its earned premiums, the reinsurer would pay for the losses up to a coverage limit.